Inside Bar Trading

[Kryzz]

Anybody got any opinions on inside bar trading for FX? Profitable/useless? Seems to be a bunch of posts on forex factory about it, and looking at charts seems like a relatively low risk trading method, but ineffective in tight ranges. Just curious if anyone here trades with them?

thanks

 

[supermatt]

I do but like anything they have to be played with existing trends or from key levels. Its all about the location with any price action signal and having a fair bit of open space for the trade to break out into. I have been trying to follow nial fullers methods as I think what he does is great, he is into IB's amongst other pa signals and also the James16 group on FF is great as well, which teaches kinda the same thing.

 

[Kryzz]

Hey matt, this is the link your referring to right?

http://www.forexfactory.com/showthread.php?t=2331

thanks

 

[supermatt]

yep thats the one. I have been following along in that thread for a couple of months now. You learn alot thats for sure.
you can just do a google search for nial fuller and his site comes up or just youtube him do find out what he does. Both are price action

 

[tech/a]

My view is his ability to read the market and his use of higher timeframes is more of a secret to success than the Pin bar / Inside bar setup.

 

[Timmy]

Many bars are pretty poorly lit.

 

[overit]

Come across an excellent thread on this at FF. Scroll through the first 7-8 pages and read Peter Crowns posts. You can also click on his profile to get his posts. He has an interesting take on it and was a pit trader for 8 years. Very articulate poster with some wise words.

No Free Lunch but all the Free Coffee you can drink.

Also an off shoot of that thread here -

The DIBS Method . . . No Free Lunch continues

My basic interpretation of it is not so much the holy grail signal but it is a signal to get you into the trade first and foremost with small risk and then you look to build position in the trend. If you get onto the trend early you continue to add positions (new inside bars) and free carry for the ride until you get stopped out.

I do a similar thing with engulfing candles.

 

[Kryzz]

Come across an excellent thread on this at FF. Scroll through the first 7-8 pages and read Peter Crowns posts. You can also click on his profile to get his posts. He has an interesting take on it and was a pit trader for 8 years. Very articulate poster with some wise words.

No Free Lunch but all the Free Coffee you can drink.

Also an off shoot of that thread here -

The DIBS Method . . . No Free Lunch continues

My basic interpretation of it is not so much the holy grail signal but it is a signal to get you into the trade first and foremost with small risk and then you look to build position in the trend. If you get onto the trend early you continue to add positions (new inside bars) and free carry for the ride until you get stopped out.

I do a similar thing with engulfing candles.

The peter crowns thread is what initially got me thinking about inside bar trading, but his lack of mention of other technical factors made me question the method, ie, major support and resistance, chart patterns etc, good thread none the less

 

[caribean]

Any candle formation significance will depend pretty much on where/when it happens, IMHO.
I almost always enter at the scariest possible times, with almost no confirmation, and when wrong i'm out quickly too, i'm not too sure about candle formations on their own, horizontal S/R rules...my

 

[overit]

It was one of the threads that hit home for me. I still think the inside bar is relatively inconsequential in the main. Its just a signal for trying to identify the break. His main rules of only trading at the beginning of the day, trading the hot hand and only trading in the direction of the trend after open are solid concepts. I think the free carry building structures is crucial to his methodology.

The last few months on the eur/usd havent been too great for it but look back in 2007-08 and early 09 and those lovely long trends. Those outliers are where you bring home the bacon. You could have had a ton of free carry trades surfing down those merry slopes with a MA stop. Only wish I spotted this thread earlier.

Did you spot this post. Peter relays some back testing results form an IBM engineer who liked what he saw. DIBS METHOD #7099

I am doing a load of work on engulfing candles at the moment. Exact same concept as the PC inside bar but you get a truck load more entries at similar strike rate. Just the risk is a tad more obviously being an outside bar compared to an inside bar. Also the engulfing bars let me operate on a smaller times frame. 15minute rather than an hour. The inside bar seems to struggle getting down that far.

 

[supermatt]

I tend to agree at the moment there are more engulfing candles than IB's.
In the J16 group they call them outside bars and are pretty powerfull if found at key levels. All an outside bar or engulfing candle is, is a 2 pin bar..

 

[tech/a]

I think those investigating these ideas would be well served in understanding VSA (Volume Spread Analysis).
The psychology of the bars and those before and after the bar being investigated needs to be understood.
Extending timeframes are more likely to give you a better picture of this psychology.
Its not the quantity of pattern found but the quality.

 

[Kryzz]

Its not the quantity of pattern found but the quality.

Quality being primarily where they form at appropriate technical points (in established trends etc) as mentioned in previous posts. I recall quite some debate over the use of VSA in FX trading on shorter timeframes in the "Forex For Dummies 2" thread. Point taken though.

cheers
shaun